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What’s the Key to Reinvigorating the Pharmaceutical Supply Chain?

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What’s the Key to Reinvigorating the Pharmaceutical Supply Chain?

While supply chains everywhere face mounting obstacles, issues in the pharmaceutical industry are particularly severe. After the COVID-19 pandemic, the sector’s shortcomings are painfully clear, so calls for change across public and private entities are growing. Pharmaceutical supply chain management will have to evolve as this pressure rises.

The U.S. was once a leader in the pharmaceutical supply chain and could become one again. As any experienced logistics professional knows, that process is easier said than done. However, while the road ahead will be challenging, that doesn’t mean it’s impossible.

The State of the Pharmaceutical Supply Chain Today

It’s important to understand where pharmaceutical supply chain management is today to learn where it can go from here. Among the biggest current issues are a reliance on foreign sources of active pharmaceutical ingredients (APIs) and a severe shortage of critical products.

Roughly 83% of the most-consumed generic drugs have no U.S. sources for their APIs. Even if U.S. manufacturers produce them domestically, that production relies on international sources — mostly in China and India — for critical supplies. COVID-19 revealed why those dependencies are risky. Over 40 Chinese pharma companies ceased production, and India stopped exporting 26 medicines during the pandemic.

These supply chain disruptions have exacerbated existing product shortages. Many of the most critical drugs face significant backlogs and availability issues. These shortages often follow a vicious cycle. As a drug’s demand surges, generic competition increases, leading to offshoring to lower production costs, making the most essential medicines the most susceptible to supply chain disruption.

What’s Next for Pharmaceutical Supply Chain Management

Pharmaceutical supply chain management must change to break this cycle and prevent future shortages and backlogs. That shift will require several significant changes across the pharma industry and its strategic partners.

Reshoring Efforts

Reshoring API production is the biggest piece of the puzzle. As long as manufacturers rely on international sources for these drug building blocks, critical medicines will be at risk of severe supply chain disruption.

U.S. drug manufacturers may already have the capacity to expand domestic production. Domestic operations account for 28% of all API manufacturing facilities, more than any other region. However, generic drugs — which account for the vast majority of consumption — rely more heavily on foreign-made APIs, and many U.S. facilities are operating under capacity.

Reinvigorating the pharmaceutical supply chain starts with domestic manufacturers capitalizing on their unused capacity. Existing facilities can begin producing some APIs companies currently outsource to foreign nations until new factories can emerge to take over the rest. That effort should focus on reshoring the most critical APIs first before expanding.

Addressing Costs

As reshoring initiatives increase, the pharmaceutical industry will face financial obstacles. The biggest reason companies offshore the most in-demand APIs in the first place is to lower their production costs. Supply chain management must also focus on minimizing costs elsewhere to offset resulting price hikes from reshoring to keep generic medication affordable.

Pharma companies can emphasize supply chain efficiency to mitigate these costs. Automated picking solutions will make warehouse operations more cost-efficient, and IoT tracking solutions can prevent product loss in transit to minimize expenses. As more companies emphasize reshoring, transportation costs can fall, too.

Medical manufacturers can also offset higher API production costs by transitioning to lower-cost alternatives for other SKUs. Single-use biopharmaceutical equipment carries lower manufacturing costs than reusable options and has faster lead times, which helps account for higher expenses elsewhere.

Public-Private Partnerships

Reshoring API manufacturing while keeping costs low will be challenging for some companies, especially in the near term. An industry-wide shift will likely require government support to balance expenses and incentivize domestic production, so public-private partnerships will play a key role in the transition.

Government incentive programs already promote the reshoring of semiconductor and electric vehicle manufacturing. The pharmaceutical industry and its supporters should push for similar legislation to incentivize API reshoring, especially given the growing U.S. demand for critical medicines. Potential rewards include tax breaks, cash rewards to cover some production costs or higher taxes on foreign-derived APIs.

The federal government has a stockpiling program to keep inventories of critical medicines to prevent damaging shortages. The problem is that this stockpile focuses on finished medication, which has a shorter shelf life, limiting the reserve’s size. Transitioning to stockpiling longer-lasting APIs to kickstart domestic drug production when necessary may be more effective.

Boosting Transparency

Pharmaceutical supply chain management must also emphasize transparency amid this shift. Today’s supply chains are too opaque to reliably track demand, supply and product quality or locations in transit. That oversight leads to spoilage, shortages and inventory distortion.

More transparency would minimize losses and enable pharma companies to predict and respond to incoming shifts to prevent stock-outs or surpluses. IoT technology is the key to this visibility. Companies using these sensors in inventories and vehicle fleets can better estimate demand and shipping times thanks to real-time data.

AI can take these benefits further by analyzing IoT data to predict future shifts. When more key players in the pharma industry have that capability, they can respond to incoming demand changes sooner, preventing shortages of critical medicines.

Moving Away from Lean Principles

All of these changes represent a shift towards resilience for pharmaceutical supply chains. Embracing resilience means organizations must let go of some of the lean principles they’ve focused on in years prior.

Lean practices like just-in-time production and eliminating inventories lower operational costs, but they leave supply chains more vulnerable to disruption. That disruption is too risky in the pharmaceutical sector to justify. Businesses must instead prepare for the unexpected, keeping larger safety stocks and using multiple distributed suppliers to mitigate any unforeseen changes.

Reshoring is an important first step in this transition from lean to resilient, but it can’t be the end. Pharmaceutical supply chain management must remove single dependencies and increase reserves everywhere to become more disruption-proof.

Pharmaceutical Supply Chain Management Has a Long Road Ahead

Reinvigorating the pharmaceutical supply chain is a challenging but necessary goal. It will take time, money and cooperation between many parties, both private and public, to work. If the industry can embrace these changes, though, they can pave the way for a safer future.

There’s no one key to better pharmaceutical supply chain management but rather a collection of several interconnected steps. Understanding that is the first step in preventing future disruption to U.S. pharmaceutical supplies.

drugs biopharmaceutical

Global Biopharmaceutical Logistics Market to Surpass Valuation of US$ 171.89 billion by 2031

Global biopharmaceutical logistics market is expected to grow from US$ 95.66 Bn in 2022 to US$ 171.89 Bn by 2031, at a CAGR of 6.5% during the forecast period 2023-2031.

The global biopharmaceutical logistics market has witnessed significant growth in recent years and is expected to continue growing in the foreseeable future. The demand for bio pharmaceutical logistics services is being driven by several factors, including the increasing demand for personalized medicines, the rising prevalence of chronic diseases, and the growing need for temperature-controlled logistics solutions.

On the supply side, the market is highly competitive, with a large number of players offering a wide range of services. Some of the key players in the market include DHL International GmbH, FedEx Corporation, United Parcel Service, Inc., Deutsche Post AG, and Kuehne + Nagel International AG. These companies are investing heavily in technology and infrastructure to improve their service offerings and gain a competitive edge.

The growth of the biopharmaceutical logistics market is being propelled by several key factors, including the increasing demand for specialized logistics solutions for the transportation of biologics, the growing need for efficient and reliable supply chain management solutions, and the rising adoption of cloud-based logistics solutions. Moreover, the increasing focus on reducing healthcare costs and improving patient outcomes is also driving the growth of the market.

However, the market is not without its challenges. One of the key challenges facing the market is the complex regulatory environment surrounding the transportation of biologics and other pharmaceutical products. Additionally, the high cost of implementing and maintaining temperature-controlled logistics solutions and the increasing competition among players are also major challenges facing the market.

In terms of trends, the biopharmaceutical logistics market is witnessing a shift towards the adoption of blockchain technology to improve supply chain transparency and security. Moreover, the market is also witnessing a growing trend towards the use of drones and autonomous vehicles for the transportation of pharmaceutical products.

Astute Analytica Analysis of the Biopharmaceutical Logistics Market

The global market is characterized by several notable trends and developments. A survey conducted by Pharmaceutical Commerce revealed that 56% of respondents reported that biologics and other temperature-sensitive products comprise more than 50% of their company’s total pharmaceutical sales. This underscores the importance of specialized logistics solutions for the transportation of biopharmaceuticals, which require temperature-controlled environments to maintain their efficacy.

The biopharmaceutical logistics market is highly regulated, with guidelines established by leading organizations such as the International Air Transport Association (IATA), the World Health Organization (WHO), and the U.S. Food and Drug Administration (FDA). These regulations help ensure the safety and quality of pharmaceutical products during transport and storage.

In terms of growth prospects, the Asia Pacific region is expected to witness the highest growth in the biopharmaceutical logistics market. This growth is being driven by factors such as the increasing demand for biologics and biosimilars, as well as rising investments in healthcare infrastructure in countries such as China and India.

The use of blockchain technology in biopharmaceutical logistics is expected to grow significantly in the coming years. Blockchain provides a secure, decentralized platform for managing and tracking pharmaceutical products throughout the supply chain, thereby improving transparency, security, and efficiency.

Another notable trend in the biopharmaceutical logistics industry is the increasing adoption of autonomous vehicles and drones for the transportation of pharmaceutical products. Companies such as UPS and FedEx are already piloting drone delivery services for medical supplies and pharmaceuticals, with the potential to improve the speed and reliability of deliveries while reducing costs.

Challenges and Growth Opportunities in the Biopharmaceutical Logistics Market


  • Stringent regulatory requirements: The biopharmaceutical logistics market is highly regulated, with strict guidelines set by organizations such as the International Air Transport Association (IATA), the World Health Organization (WHO), and the U.S. Food and Drug Administration (FDA). Compliance with these regulations can be a significant challenge for logistics providers, especially those operating in multiple regions with varying requirements.
  • Maintaining product integrity: Biopharmaceutical products are highly sensitive and require strict temperature control and monitoring during transport and storage to maintain their efficacy. Any failure to maintain product integrity can result in significant financial losses for manufacturers and distributors.
  • Supply chain complexity: The biopharmaceutical logistics market supply chain is complex, with multiple stakeholders involved in the transportation and delivery of products. Managing this complexity requires specialized knowledge and expertise, which can be a challenge for logistics providers.
  • Cost pressures: The high cost of biopharmaceutical products, coupled with the need for specialized logistics solutions, can put significant cost pressures on manufacturers and distributors.

Growth opportunities:

  • Technological advancements: The adoption of new technologies such as blockchain, IoT, and AI is expected to provide significant growth opportunities for the biopharmaceutical logistics market. These technologies can help improve transparency, security, and efficiency throughout the supply chain.
  • Emerging markets: The increasing demand for biopharmaceutical products in emerging markets such as Asia Pacific and Latin America is expected to drive significant growth in the biopharmaceutical logistics market. Logistics providers that are able to establish a strong presence in these markets will be well-positioned to capitalize on this growth opportunity.
  • Specialized solutions: The growing complexity of the biopharmaceutical supply chain is creating a need for specialized logistics solutions, including temperature-controlled transportation and storage, cold chain management, and specialized packaging. Logistics providers that are able to offer these solutions will be well-positioned to capture market share.
  • Partnership and collaboration: Collaboration and partnership between logistics providers, pharmaceutical manufacturers, and distributors can help create more efficient and effective supply chain solutions. This can help drive growth and innovation in the biopharmaceutical logistics market.

Cold Chain to Generate More than US$ 112.25 Billion Revenue of Global Biopharmaceutical by 2031

The global cold chain market is crucial for the safe transportation and storage of temperature-sensitive products such as pharmaceuticals, vaccines, and perishable foods. The market is expected to grow at a CAGR of 7.2%, generating more than US$ 112.25 billion in revenue by 2031. The increasing demand for temperature-controlled transportation and storage solutions, particularly in emerging economies, is driving this growth.

E-commerce has also contributed to the trend in the global biopharmaceutical logistics market, as consumers expect fresh and high-quality products delivered to their doorstep. The COVID-19 pandemic has highlighted the importance of the cold chain industry in the distribution of vaccines and other medical supplies. However, challenges such as the high cost of maintaining temperature-controlled infrastructure and equipment, and inconsistent regulatory oversight in developing economies pose significant obstacles to industry growth. Despite these challenges, the growth potential of the cold chain market remains strong, particularly with ongoing investments in technology and personnel to address these challenges.

Air Shipping of the Biopharmaceuticals to bring in a Revenue of Over US$ 68.26 Billion by 2031

The global biopharmaceutical logistics market is experiencing significant growth due to the rise of innovative and effective therapies to treat various diseases. The transportation of these products has become increasingly important, and air shipping has become a crucial mode of transportation for the biopharmaceutical industry. Air shipping is preferred because it is fast, efficient, and reliable, allowing for faster delivery times which is particularly important for vaccines that need to be transported quickly to prevent spoilage.

The COVID-19 pandemic has further highlighted the importance of air shipping for biopharmaceuticals, ensuring that these products reach their intended destinations on time. The projected revenue of over US$ 68.26 billion by 2031 for air shipping of biopharmaceuticals reflects the growing demand for this mode of transportation. Advances in technology and logistics are expected to make air shipping even more efficient and reliable in the coming years across global biopharmaceutical logistics market, further boosting demand. Challenges that need to be addressed include ensuring product safety during transportation and regulatory compliance issues. Air shipping is poised to become a significant revenue generator for the biopharmaceutical industry as the demand for biopharmaceuticals increases and the need for faster delivery times continues to grow.

Some of the Top Market Players Are:

  • Deutsche Post DHL
  • Kuehne+Nagel
  • DB Schenker
  • FedEx
  • AmerisourceBergen
  • XPO Logistics
  • Panalpina
  • Versacold
  • Agility
  • DSV
  • UPS
  • Other Prominent Players

5 Ways WMS can Benefit the Pharmaceutical Supply Chain

Warehouse management software is a must for every supply chain, but for some industries, it can provide additional benefits. Craig Powell, Managing Director of Balloon One, shares his insight into how warehouse management software can be used to optimize pharmaceutical logistics.

Every supply chain is dependent on effective warehouse management, but for the pharmaceutical industry, there are additionally complex challenges to be overcome. Fortunately, many of the unique issues that handling drugs and medical equipment present may be benefitted by the implementation of warehouse management software (WMS).

Below, I’ll take you through just some of the ways that WMS can benefit your pharmaceutical warehouse.

FMD compliance

With WMS technology, it’s easier to process and securely transfer digital information so that transparency across the whole supply chain can be achieved. This is crucial for compliance with the Falsified Medicines Directive (FMD). The FMD states that every pharmaceutical package must have a unique barcode, containing the batch number, expiry date, and a unique serial number. WMS can read these and keep track of this information, improving efficiency. This also ensures that SecurMed UK, the national medicine verification organization, can be informed when stock is received, moved, and picked for dispatch — again, in compliance with the FMD.

Time sensitivity

One of the most important elements of pharmaceutical supply is tracking drug expiry dates. WMS can keep dates and product locations to hand, along with other important digital information, to help optimize your first expired, first-out (FEFO) system of inventory management. Not only will this further ensure the goods you store and move are safer, but it can drastically decrease what slips through the cracks and needs to be thrown away once expired. This can help you keep to waste output targets and saves your clients money too, and fewer resources are wasted. It also helps ensure that stock spends as little time in transit and storage as possible, so efficiency is further improved.

Pharmaceutical maintenance

According to the MHRA, almost one-third of critical and major deficiencies are due to improper storage temperatures (ABB). WMS can help you keep track of complicated storage information such as the need for temperature or climate-controlled warehousing, as well as contamination control. It can even alert you to urgent issues such as faulty fridges. All this can prevent medicines from spoiling, keeping wasted stock to a minimum, and accurate temperature control can help save energy while lowering heating and cooling costs too.

Eliminating security concerns

With data and information, such as stock levels, presented in a visual, easy-to-digest format, you can also far more effectively manage security issues such as theft. Digitizing processes such as vendor tracking and labeling can prevent both accidental and criminal mislabelling, reducing the risk of ‘salting’; monitoring motion-detection alarms and cameras can prevent tampering and criminal activity, and logging each step of your safe disposal practices can prove useful for meeting regulations — or if you come across any legal or environmental trouble.

Customizable solutions

WMS is designed to be customizable to suit all kinds of projects, so no matter what your needs are, you’ll likely find the technology or be able to personalize your software to better streamline your processes. For example, if you need tailored traceability and storage monitoring, or personalized picking and packing systems, don’t make do — research the options that are available to you. If you can’t find a solution for a particularly complex warehousing requirement, speak to your WMS provider about what packages, add-ons, and personalized services they can provide.

These are just some of the ways WMS is elevating the pharmaceutical supply chain. If your warehouse has complex requirements, you may be surprised by how easily you can streamline your processes with this technology.